How and why MicroStrategy buys Bitcoin
For more than two and a half years, MicroStrategy has been actively investing in Bitcoin. This investment policy allowed her to become the largest Bitcoin holder in the world.
In 2020, MicroStrategy became the first public company to buy Bitcoin. Since then, it has been the largest holder of the first cryptocurrency and has 140,000 coins worth more than $4.17 billion on its balance sheet. MicroStrategy’s aggressive investments have caused many institutional investors to pay attention to the cryptocurrency sector. Later, tech giants such as Elon Musk’s Tesla and Jack Dorsey’s Square also announced the purchase of Bitcoin.
About Michael Saylor and MicroStrategy
In 1989, Michael Saylor and Sanju Bansal founded MicroStrategy, a software company that analyzes external and internal data for business decision making. The company developed quite quickly and in 1998 became public, its shares began to be traded on the stock exchange. Since April 20, 1999, MicroStrategy shares have been showing rapid growth (+4500%).
However, in 2000, the US Securities and Exchange Commission (SEC) accused MicroStrategy of inflating revenue figures for the past two years. As a result, the company paid a fine of $11 million, but the shares collapsed by more than 95%. Nevertheless, MicroStrategy remains a leader in its industry and continues to develop new products.
In 2020, Michael Saylor decided to transfer some of MicroStrategy’s treasury reserves to Bitcoin. And the company made the first purchase of cryptocurrency: 21,454 BTC for $250 million. The average price of one coin was $11,652.
The “cheap money policy” that central banks have been implementing to stimulate the economy during the pandemic has led to a strong increase in the money supply. This will cause high inflation in the future. Therefore, according to Saylor, the purchase of Bitcoin was a desire to protect against the risks of devaluation of fiat currencies.
“This investment reflects our belief that Bitcoin, as the most popular cryptocurrency in the world, is a reliable store of value and an attractive investment asset. Its long-term potential is higher than that of fiat money.”– claimed Michael Sailor.
In addition, Michael Saylor has repeatedly stated that Bitcoin is a revolutionary new technology, like Facebook or Google, but only in the “world of money”. The digital transformation of assets is advancing very quickly and, according to Saylor, the future is with mobile digital wallets. And their widespread use will lead to the introduction of reliable digital assets, including Bitcoin.
Michael Saylor also believes that Bitcoin is a new reserve asset, into which other companies will soon transfer part of their funds. In addition, in the long term, the return on investment in Bitcoin will be much higher than in other assets.
As a result, MicroStrategy launched a strategy to buy Bitcoin, and in 2020 the company acquired cryptocurrencies worth $1.125 billion.
Buying Bitcoin in 2020
August 11, 2020: purchase of 21,454 BTC for $250 million. The average price is $11,652. Twitter/Form K-8 (sec.gov)
September 14, 2020: purchase of 16,796 BTC for $175 million. Average price is $10,419. Twitter/Form K-8 (sec.gov)
December 4, 2020: purchase of 2,574 BTC for $50 million. Average price is $19,427. Twitter/Form K-8 (sec.gov)
December 21, 2020: purchase of 29,646 BTC for $650 million. The average price is $21,925. Twitter/Form K-8 (sec.gov)
MicroStrategy’s investment in Bitcoin aroused the interest of the entire crypto industry, and each new purchase was covered in all the media on the front pages. A number of large institutional investors began to discuss cryptocurrencies, which eventually attracted large capital into the industry.
As of December 30, 2020, there were 1.151 million BTC under management of private and public companies, as well as crypto-focused funds, totaling over $32.4 billion.
The company’s shares begin to rise rapidly. On January 8, 2020, financial conglomerate Morgan Stanley acquires an 11.9% stake in MicroStrategy.
From the moment of the first purchase of Bitcoin and until February 9, 2021, MicroStrategy shares have grown by 900%. And Bitcoin began its historic bull run and grew by 320% over the same period.
At the beginning of 2021, the market was stirred up by the news that Elon Musk’s Tesla company joined the investment in Bitcoin, having bought coins for $1.5 billion. And Michael Saylor stated that investment in Bitcoin is more attractive than in Apple and Facebook:
“I invested in everything. I was an early investor in Apple, Facebook, Amazon, Google, OpenTable, eBay and PayPal. And raised a lot of money. I increased the capital ten, twenty times. And I want to say that investing in bitcoin looks much more attractive.”
Throughout 2021, the company was actively buying Bitcoin not only with its own funds, but also by issuing debt securities, the profit from which was directed to the purchase of cryptocurrency. And here is an interesting point: the company’s assets, including Bitcoin, acted as collateral for the bonds.
The company made several large purchases right at the very top of the market, almost at the maximum price: on April 5, MicroStrategy acquired 253 BTC at a price of $59,339, and on November 29, 7,002 BTC at a price of $59,187. At the same time, when in mid-2021 Bitcoin lost more than 50% of the cost, Sailor stated that they are ready to endure any drawdown and are not going to sell cryptocurrency.
Bitcoin purchases in 2021
January 22, 2021: purchase of 314 BTC for $10 million. The average price is $31,808. Twitter/Form K-8 (sec.gov)
February 2, 2021: purchase of 295 BTC for $10 million. Average price is $33,810. Twitter/Form K-8 (sec.gov)
February 24, 2021: purchase of 19,452 BTC for $1.026 billion. The average price is $52,765. Twitter/Form K-8 (sec.gov)
March 1, 2021: purchase of 328 BTC for $15 million. The average price is $45,710. Twitter/Form K-8 (sec.gov)
March 5, 2021: buying 205 BTC for $10 million. Average price is $48,888. Twitter/Form K-8 (sec.gov)
March 12, 2021: purchase of 262 BTC for $15 million. Average price is $57,146. Twitter/Form K-8 (sec.gov)
April 5, 2021: purchase of 253 BTC for $15 million. Average price is $59,339. Twitter/Form K-8 (sec.gov)
May 13, 2021: purchase of 271 BTC for $15 million. Average price is $55,387. Twitter/Form K-8 (sec.gov)
May 18, 2021: purchase of 229 BTC for $10 million. Average price is $43,663. Twitter/Form K-8 (sec.gov)
June 21, 2021: purchase of 13,005 BTC for $489 million. Average price is $37,617. Twitter/Form K-8 (sec.gov)
August 24, 2021: purchase of 3,907 BTC for $177 million. The average price is $45,294. Twitter/Form K-8 (sec.gov)
September 13, 2021: purchase of 5,050 BTC for $242.9 million. The average price is $48,099. Twitter/Form K-8 (sec.gov)
November 29, 2021: purchase of 7,002 BTC for $414.4 million. The average price is $59,187. Twitter/Form K-8 (sec.gov)
December 9, 2021: purchase of 1,434 BTC for $82.4 million. The average price is $57,477. Twitter/Form K-8 (sec.gov)
December 30, 2021: purchase of 1,914 BTC for $94.2 million. The average price is $49,229. Twitter/Form K-8 (sec.gov)
Throughout 2022, there was a bearish trend in the cryptocurrency market. Bitcoin lost 78% of its value, and against the background of each new decrease in the cryptocurrency, MicroStrategy shares also fell. But despite this, Michael Sailor continued to buy Bitcoin and in every interview stated its advantages:
“Bitcoin is the most reliable thing in a very volatile world. It is more secure than the other 19,000 cryptocurrencies, than any stock, than owning property anywhere in the world.”
On August 8, 2022, Sailor steps down as CEO of MicroStrategy and becomes Executive Chairman. According to him, such a decision will make it possible to deal more effectively with Bitcoin-direction.
Bitcoin purchases in 2022
February 1, 2022: purchase of 660 BTC for $25 million. Average price is $37,865. Twitter/Form K-8 (sec.gov)
April 5, 2022: purchase of 4,167 BTC for $190.5 million. The average price is $45,714. Twitter/Form K-8 (sec.gov)
June 29, 2022: purchase of 480 BTC for $10 million. Average price is $20,817. Twitter/Form K-8 (sec.gov)
September 20, 2022: purchase of 301 BTC for $6 million. The average price is $19,851. Twitter/Form K-8 (sec.gov)
December 21, 2022: purchase of 2,395 BTC for $42.8 million. The average price is $17,871. Twitter/Form K-8 (sec.gov)
December 22, 2022: sale of 704 BTC for $11.8 million. The average price is $16,761. Twitter/Form K-8 (sec.gov)
December 24, 2022: purchase of 810 BTC for $13.6 million. The average price is $16,845. Twitter/Form K-8 (sec.gov)
In early 2023, MicroStrategy made 2 more BTC purchases, acquiring a total of 7,500 BTC worth $179.3 million.
Bitcoin purchases in 2023
March 23, 2023: purchase of 6,455 BTC for $150 million. The average price is $23,238. Twitter/Form K-8 (sec.gov)
April 5, 2023: purchase of 1,045 BTC for $29.3 million. The average price is $28,016. Twitter/Form K-8 (sec.gov)
MicroStrategy currently owns 140,000 BTC worth over $4.17 billion. The average value of one coin is $29,803.
Graph of all Bitcoin purchases
The company has strongly shown that it has no plans to deviate from its Bitcoin accumulation strategy even during the bear market. Although many criticize Saylor, he states that MicroStrategy will continue to accumulate cryptocurrency without any plans to sell it:
“Bitcoin will outlive us all, and it cannot be classified as a financial bubble. It can be bought in small volumes for a long time. You can hold crypto for your entire life and pass it on to the next generations.”
